We get this question quite a bit, so we wanted to walk through what it’s like to go through the program. We shared the qualifications and guidelines for Jackson Habitat’s Homebuyer Program in last month’s article. In this article, we’ll talk more about the process an applicant follows to go through the program.
While reading this explanation of our process, keep in mind that this describes the process for the program at Habitat for Humanity in Jackson, Michigan. As noted in the previous article, Habitat affiliates nationwide follow the same guidelines for the homeowner program but may have differences in the process, depending on the population size of the geographical area they serve and the capacity of the affiliate.
Also keep in mind this article is published in July 2023, and some parts of Jackson Habitat’s process may change over time. Information will always be available on this website and by scheduling an appointment to speak with a family services staff member.
Getting Started
Applying for Habitat’s Homebuyer Program in Jackson is as simple as filling out a “Homeowner Interest Form” to get started. The program is open year round with no restricted “open enrollment” dates.
After filling out the form, the person is contacted to schedule an appointment for an orientation, which will provide information about the program and answer questions. During the orientation, information is given about how to take the next step, which is to connect with Habitat for Humanity of Michigan’s Housing Counseling and Financial Education team and schedule a meeting.
Housing and Financial Counseling
Everyone who purchases a Habitat house must participate in a HUD-certified housing and financial counseling program. Habitat for Humanity offers these programs through Habitat for Humanity of Michigan (HFHM), which is Michigan’s state office supporting Habitat local affiliates statewide. The office is located in Lansing, but all services are offered virtually, via online portals and phone consultations.
Virtual does not mean alone, however. HFHM’s team consists of qualified, friendly, competent professionals who work with individuals one-on-one, as well as in groups, to provide education and counseling services.
Individuals who wish to apply to purchase a Habitat home will be provided a counselor to guide them through the process, which includes regular phone appointments together.
During this process, the individual is coached on meeting financial goals, which can include budgeting, credit, saving, and learning what it takes to get a mortgage to purchase a home. Their counselor will be available to them throughout the process of getting a mortgage when that time comes, so applicants are not going through that often-intimidating process alone.
The amount of time spent working with the financial and housing counselor varies from person to person. It starts with identifying financial and housing goals and assessing the person’s current situation. If the goal is homeownership, a plan is formed, and the counselor and applicant will work together for however long it takes for the applicant to be prepared to qualify for a mortgage. This could mean working on credit issues, paying off debt, or saving money. For some people, it can take a couple of months. For others it can take a couple of years or more.
Full Application
Once the preparation has been done and it’s time for the next step, the HFHM counselor refers the applicant back to us here at Jackson Habitat to begin the process of homeownership. This step starts with a full application that includes providing documentation to verify employment and/or other source of income, amount of income, and assets, which will be used to begin the mortgage qualification process.
At this point, there are choices that are presented to the applicant. If there is a Habitat house available, the applicant may be given the option to purchase it. Another option is to be placed on a waiting list for a Habitat house. And the applicant will always also be presented with the option to be referred to a local Realtor to consider purchasing a house on the market (instead of a Habitat house).
In most cases, this is also the point where we will make a referral to a mortgage lender for a pre-approval to know what loan amount the applicant can qualify for.
Whether the applicant ends up purchasing a Habitat house now, in the future, or ends up buying a house on the market with a Realtor, their financial counselor partner from HFHM and the family services staff at Jackson Habitat will be there to help guide them through the process.
Sweat Equity
The term “sweat equity” is known as a Habitat thing. When an applicant decides to purchase a Habitat house, they are able to buy it with zero or very little down payment. Habitat has access to federal and state grant programs that can cover the down payment, closing costs, and sometimes help with “gap funding”, which is when the sales price (which is always equal to the appraised value) is more than the affordable mortgage loan amount.
You may remember from the last article that “ability to partner” is one of the qualification criteria for Habitat’s homeowner program. This is where sweat equity comes in. In order to purchase a Habitat house, the applicant must complete a minimum of 300 hours of volunteer time, much of which will be helping Habitat staff and other volunteers build their house. Other types of volunteer work that can be used to fulfill this requirement can include things like working on other Habitat homes, working in the ReStore, providing lunches and/or water or snacks to volunteers, helping in the Habitat office… The options are endless, really.
The idea is that the applicant becomes heavily invested in their own success. By the time they arrive at the closing table to sign the mortgage papers, they’ve put “blood, sweat, and tears” (figuratively speaking) into the process. This not only creates a sense of pride and ownership, but it also ensures they’re starting their journey as a new homeowner with knowledge and experience.
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